FLEXIBLE MANUFACTURING

Photo by: Natalia Bratslavsky

Business firms generally choose to compete within one or two areas of
strength. These areas of strength are often referred to as distinctive
competencies, core competencies, or competitive priorities. Among the
options for competition are price (cost), quality, delivery, service, and
flexibility. An ever-increasing number of firms are choosing to compete in
the area of flexibility. Generally, this has meant that the firm's
major strength is flexibility of product (able to easily make changes in
the product) or flexibility of volume (able to easily absorb large shifts
in demand). Firms that are able to do this are said to have flexible
capacity, the ability to operate manufacturing equipment at different
production rates by varying staffing levels and operating hours, or
starting and stopping at will. Specifically, manufacturing flexibility
consists of three components: (1) the flexibility to produce a variety of
products using the same machines and to produce the same products on
different machines; (2) the flexibility to produce new products on
existing machines; and (3) the flexibility of the machines to accommodate
changes in the design of products.

FLEXIBLE MANUFACTURING SYSTEMS

A flexible manufacturing system (FMS) is a group of numerically-controlled
machine tools, interconnected by a central control system. The various
machining cells are interconnected, via loading and unloading stations, by
an automated transport system. Operational flexibility is enhanced by the
ability to execute all manufacturing tasks on numerous product designs in
small quantities and with faster delivery. It has been described as an
automated job shop and as a miniature automated factory. Simply stated, it
is an automated production system that produces one or more families of
parts in a flexible manner. Today, this prospect of automation and
flexibility presents the possibility of producing nonstandard parts to
create a competitive advantage.

The concept of flexible manufacturing systems evolved during the 1960s
when robots, programmable controllers, and computerized numerical controls
brought a controlled environment to the factory floor in the form of
numerically-controlled and direct-numerically-controlled machines.

For the most part, FMS is limited to firms involved in batch production or
job shop environments. Normally, batch producers have two kinds of
equipment from which to choose: dedicated machinery or unautomated,
general-purpose tools. Dedicated machinery results in cost savings but
lacks flexibility. General purpose machines such as lathes, milling
machines, or drill presses are all costly, and may not reach full
capacity. Flexible manufacturing systems provide the batch manufacturer
with another option—one that can make batch manufacturing just as
efficient and productive as mass production.

OBJECTIVES OF FMS

Stated formally, the general objectives of an FMS are to approach the
efficiencies and economies of scale normally associated with mass
production, and to maintain the flexibility required for small- and
medium-lot-size production of a variety of parts.

Two kinds of manufacturing systems fall within the FMS spectrum. These are
assembly systems, which assemble components into final products and
forming systems, which actually form components or final products. A
generic FMS is said to consist of the following components:

A set of work stations containing machine tools that do not require
significant set-up time or change-over between successive jobs.
Typically, these machines perform milling, boring, drilling, tapping,
reaming, turning, and grooving operations.

A material-handling system that is automated and flexible in that it
permits jobs to move between any pair of machines so that any job
routing can be followed.

A network of supervisory computers and microprocessors that perform some
or all of the following tasks: (a) directs the routing of jobs through
the system; (b) tracks the status of all jobs in progress so it is known
where each job is to go next; (c) passes the instructions for the
processing of each operation to each station and ensures that the right
tools are available for the job; and (d) provides essential monitoring
of the correct performance of operations and signals problems requiring
attention.

Storage, locally at the work stations, and/or centrally at the system
level.

The jobs to be processed by the system. In operating an FMS, the worker
enters the job to be run at the supervisory computer, which then
downloads the part programs to the cell control or NC controller.

BENEFITS OF FMS

The potential benefits from the implementation and utilization of a
flexible manufacturing system have been detailed by numerous researchers
on the subject. A review of the literature reveals many tangible and
intangible benefits that FMS users extol. These benefits include:

less waste

fewer workstations

quicker changes of tools, dies, and stamping machinery

reduced downtime

better control over quality

reduced labor

more efficient use of machinery

work-in-process inventory reduced

increased capacity

increased production flexibility

The savings from these benefits can be sizable. Enough so that Ford has
poured $4,400,000 into overhauling its Torrence Avenue plant in Chicago,
giving it flexible manufacturing capability. This will allow the factory
to add new models in as little as two weeks instead of two months or
longer. Richard Truett reports, in
Automotive News,
that the flexible manufacturing systems used in five of Ford Motor
Company's plants will yield a $2.5 billion savings. Truett also
reports that, by the year 2010, Ford will have converted 80 percent of its
plants to flexible manufacturing.

LIMITATIONS OF FMS

Despite these benefits, FMS does have certain limitations. In particular,
this type of system can only handle a relatively-narrow range of part
varieties, so it must be used for similar parts (family of parts) that
require similar processing. Due to increased complexity and cost, an FMS
also requires a longer planning and development period than traditional
manufacturing equipment.

Equipment utilization for the FMS sometimes is not as high as one would
expect. Japanese firms tend to have a much higher equipment utilization
rate than U.S. manufacturers utilizing FMS. This is probably a result of
U.S. users' attempt to utilize FMS for high-volume production of a
few parts rather than for a high-variety production of many parts at a low
cost per unit. U.S. firms average ten types of parts per machine, compared
to ninety-three types of parts per machine in Japan.

Other problems can result from a lack of technical literacy, management
incompetence, and poor implementation of the FMS process. If the firm
misidentifies its objectives and manufacturing mission, and does not
maintain a manufacturing strategy that is consistent with the
firm's overall strategy, problems are inevitable. It is crucial
that a firm's technology acquisition decisions be consistent with
its manufacturing strategy.

If a firm chooses to compete on the basis of flexibility rather than cost
or quality, it may be a candidate for flexible manufacturing, especially
if it is suited for low- to mid-volume production. This is particularly
true if the firm is in an industry where products change rapidly, and the
ability to introduce new products may be more important than minimizing
cost. In this scenario, scale is no longer the main concern and size is no
longer a barrier to entry.

However, an FMS may not be appropriate for some firms. Since new
technology is costly and requires several years to install and become
productive,
it requires a supportive infrastructure and the allocation of scarce
resources for implementation. Frankly, many firms do not possess the
necessary resources. Economically justifying an FMS can be a difficult
task—especially since cost accounting tends to be designed for mass
production of a mature product, with known characteristics, and a stable
technology. Therefore, it is difficult to give an accurate indication of
whether flexible manufacturing is justified. The question remains of how
to quantify the benefits of flexibility. In addition, rapidly-changing
technology and shortened product life cycles can cause capital equipment
to quickly become obsolete.

For other firms, their products may not require processes at the
technological level of an FMS. IBM found that a redesigned printer was
simple enough for high-quality manual assembly and that the manual
assembly could be achieved at a lower cost than automated assembly.
Potential FMS users should also consider that some of the costs
traditionally incurred in manufacturing may actually be higher in a
flexible automated system than in conventional manufacturing. Although the
system is continually self-monitoring, maintenance costs are expected to
be higher. Energy costs are likely to be higher despite more efficient use
of energy. Increased machine utilization can result in faster
deterioration of equipment, providing a shorter than average economic
life. Finally, personnel training costs may prove to be relatively high.

For some firms, worker resistance is a problem. Workers tend to perceive
automation as an effort to replace them with a tireless piece of metal
that does not eat, take breaks, or go to the bathroom. To combat this
perception, many firms stress that workers are upgraded as a result of FMS
installation, and that no loss of jobs ensues. Despite any problems, use
of flexible manufacturing systems should continue to grow as more firms
are forced to compete on a flexibility basis and as technology advances.
It has shown many advantages in low- to mid-volume, high-mix production
applications. Future systems will probably see lower and lower quantities
per batch. FMS can somewhat shift emphasis in manufacturing from
large-scale, repetitive production of standard products to
highly-automated job shops featuring the manufacture of items in small
batches for specific customers. The increased availability of flexible
manufacturing technology will also give multi-product firms more choices
of how to design production facilities, how to assign products to
facilities, and how to share capacity among products.

BEYOND FLEXIBLE MANUFACTURING:
AGILE MANUFACTURING

Fliedner and Vokurka, in their
Production and Inventory Management Journal
article on agile manufacturing, define agile manufacturing as the ability
to successfully market low-cost, high-quality products with short lead
times (and in varying volumes) that provide enhanced customer value
through customization. An agile firm manages change as a matter of
routine. The difference between agility and flexibility is whether or not
the change in market demand has been predicted. Flexibility refers to the
capability of rapidly changing from one task to another when changing
conditions are defined ahead of time. Agility refers to the ability to
respond quickly to unanticipated market-place changes. Fliedner and
Vokurka present four, key dimensions of agile competition:

Enriching the customer. This requires a quick understanding of the
unique requirements of individual customers and rapidly meeting those
requirements.

Cooperating to enhance competitiveness. This includes better
intraorganizational cooperation and may extend to interorganizational
cooperation—such as supplier partnerships and virtual
relationships.

Organizing to master change and uncertainty. This involves utilizing new
organizational structures provided by such techniques as concurrent
engineering and cross-functional teams.

Leveraging the impact of people and information. This places great
emphasis on the development of employees through education, training,
and empowerment.

IMPLEMENTING AGILE MANUFACTURING

Finally, the two authors prescribe a series of internal and external
initiatives for successful implementation of agile manufacturing. The
internal initiatives include the following:

Business process reengineering. This is the rethinking and radical
redesign of business processes so that dramatic improvements in critical
areas can be achieved.

Management planning and execution tools. This involves the use of such
techniques as manufacturing resource planning, real-time manufacturing
execution systems, production planning configurators, and real-time
threaded scheduling.

Design for manufacturability/assembly. The results include modular
products that allow for future upgrades, fewer parts for enhanced
reliability, and recycling.

Reorganization processes. Process reorganization could include the use
of flexible manufacturing systems or cellular manufacturing.

Intraorganizational cooperation. This form of cooperation calls for the
use of employee empowerment/involvement techniques and employee
education and training.

External initiatives include:

Interorganizational cooperation. This means early supplier involvement
in product and process designs, training suppliers in such activities as
vendor-managed inventories, and joint research efforts.

Supply chain practices. The use of outsourcing, schedule sharing, and
postponement of product design are included.

Information technology. Some companies are using technology to improve
supply chain improvement. For example, the move from centralized,
mainframe computing to decentralized, client and server computing.

Point-of-sale data collection. Reductions in order entry time are being
achieved with electronic data interchange (EDI), radio frequency
communications tools, bar coding, and electronic commerce.

The authors feel that flexibility provided by agility may emerge as the
most important competitive priority of the early twenty-first century, as
competition is expected to ensure that manufacturers will increasingly
need to adapt readily to market shifts. Ford Motor Company has reportedly
invested $350 million in new, agile manufacturing equipment at its
Cleveland Engine Plant. A Ford Vice President describes the move as the
heart of lean manufacturing.